2024 Election Watch: Comparing the Presidential Candidates’ Potential Tax Policies
Updated October 10, 2024; originally published October 10, 2024
With the U.S. presidential election just weeks away, we’ve heard to some degree from both candidates regarding their potential tax plans. Vice President Kamala Harris (D) has provided a fair amount of detail regarding a vision for tax policy, and while her proposals do not necessarily mirror President Joe Biden’s fiscal 2025 budget, there are some comparisons. Former President Donald Trump (R), on the other hand, has not released a detailed plan, but he has commented on several areas of tax law and policy, making it possible to get an idea of how his approach would differ from Harris’s.
No matter the makeup of the White House and Congress, passing tax legislation during the next presidential term is likely to be challenging. Even if the House, Senate, and White House are of the same party, it’s possible that any tax law changes will still have to be passed through the budget reconciliation process because of a lack of Senate votes to avoid that process. If the White House, Senate, and House are not all the same party, the chances of enacting any tax legislation becomes even more doubtful. That said, tax policy underpins business decisions and consumer behavior, so businesses and individuals should pay close attention to how any proposed policy could alter their total tax liabilities.
The table below outlines current tax law and policy, as well as potential future tax policies under a Harris or Trump administration. All data is based on information released or discussed by Harris and Trump as of October 8, 2024.
Business Taxes
CURRENT LAW
Corporate income tax is subject to a flat 21% rate. The corporate alternative minimum tax (AMT) rate is 15%.
U.S. multinationals must pay a foreign tax rate of 10.5% on their global intangible low-taxed income (GILTI).
Foreign-derived intangible income (FDII) enjoys a reduced rate of 13.125%.
The base-erosion and anti-abuse tax (BEAT) rate is 10%.
The stock buyback tax rate is 1%.
HARRIS'S STATED GOALS
Harris proposes to increase the corporate rate to 28% and the corporate AMT to 21%.
Harris proposes to double the 10.5% GILTI rate to 21% and assess the tax country by country. She also proposes to repeal the reduced FDII rate.* Harris proposes to replace the BEAT with rules consistent with the Organization for Economic Cooperation and Development (OECD) Pillar Two qualified domestic minimum top-up tax and undertaxed profits rule.
Harris proposes to increase the stock buyback tax to 4%, make permanent the excess business loss limitation for pass-through businesses, and further limit the deductibility of employee compensation under Internal Revenue Code (IRC) Section 162(m).
*President Biden’s fiscal 2025 budget contemplates replacing the FDII regime with unspecified research and development incentives.
TRUMP'S STATED GOALS
Trump proposes to reduce the corporate rate to 15% for companies making products in the U.S. and 20% for all others.
Capital Gains and Dividends
CURRENT LAW
The top long-term capital gains rate is 20% for income over $518,901 ($583,751 for married filing jointly).
There is also a 3.8% net investment income tax (NIIT) for those earning over $200,000 ($250,000 for married filing jointly).
HARRIS'S STATED GOALS
Harris proposes to tax long-term capital gains and qualified dividends at 28% (33% for those with income of at least $1 million). She proposes to tax at death unrealized capital gains exceeding $5 million ($10 million for joint filers).
For those earning over $400,000, Harris proposes to increase the NIIT rate to 5% and tax carried interest as ordinary income.
TRUMP'S STATED GOALS
Trump hasn’t specified a plan but has indicated he’d like to lower the rates.
Credits
CURRENT LAW
The child tax credit (CTC) varies based on income, with a maximum credit of $2,000 per child.
For tax years 2021-2025, households with income of more than 400% of the federal poverty line for their family size may be eligible for health insurance premium credits.
The low-income housing tax credit (LIHTC) offers credits of 4% or 9% based on the project.
HARRIS'S STATED GOALS
Harris proposes to expand the CTC to $6,000 for newborns, reinstate the pandemic-era credit amounts, and restore the credit’s full refundability. She also proposes to expand the earned income tax credit for filers who do not claim children.
Harris proposes to permanently extend expanded health insurance premium credits.
Harris has proposed expanding the LIHTC and enacting credits for new home buyers ($25,000 over four years) and for the construction of starter homes (unspecified).
TRUMP'S STATED GOALS
Vice presidential candidate JD Vance has suggested increasing the CTC to $5,000.
Deductions
CURRENT LAW
The Tax Cuts and Jobs Act (TCJA) capped the state and local tax (SALT) deduction at $10,000.
HARRIS'S STATED GOALS
Harris proposes to increase the small business startup deduction from $5,000 to $50,000.
Harris proposes to disallow companies from deducting the compensation of employees making over $1 million.
Harris also proposes to claw back deductions for depreciation and interest for some rental construction investment.
TRUMP'S STATED GOALS
Trump proposes to eliminate or increase the SALT deduction cap.
Estate Taxes
CURRENT LAW
The estate tax exemption for 2024 is $13.61 million (adjusted for inflation). Transfers of appreciated property at death get a step-up in basis.
HARRIS'S STATED GOALS
Harris proposes to tax at death unrealized capital gains exceeding $5 million ($10 million for joint filers).
TRUMP'S STATED GOALS
Trump proposes to make permanent the expiring estate tax reductions in the TCJA.
Exemptions
CURRENT LAW
Social Security benefits and income from tips and overtime pay are subject to federal and state taxation.
HARRIS'S STATED GOALS
Harris proposes to exempt tip income from taxation.
TRUMP'S STATED GOALS
Trump proposes to exempt tip income, overtime pay, and Social Security benefits from taxation.
Individual Taxes
CURRENT LAW
The top marginal rate is 37% for income over $609,350 for individuals and $731,200 for married filing jointly.
Social Security benefits and income from tips and overtime pay are subject to federal and state taxation.
Under IRC Section 1031, gain realized in a like-kind exchange qualifies for tax-free deferral.
For tax years 2021-2025, households with income of more than 400% of the federal poverty line for their family size may be eligible for health insurance premium credits.
HARRIS'S STATED GOALS
Harris has pledged not to raise taxes on those earning less than $400,000 per year. For individuals with annual income over $400,000 ($450,000 for married filing jointly), Harris proposes to increase the maximum individual rate from 37% to the pre-TCJA level of 39.6%. She also proposes to increase the NIIT rate to 5% from 3.8% for those individuals.
Harris proposes to abolish taxes on tips.
Harris proposes to limit IRC Section 1031 like-kind exchanges to $500,000 in gains.
Harris proposes to permanently extend expanded health insurance premium credits.
Harris also proposes to limit retirement account contributions for high earners with large individual retirement account (IRA) balances.
TRUMP'S STATED GOALS
Trump has suggested replacing individual income taxes with tariffs.
Trump proposes to abolish taxes on tips, overtime pay, and Social Security benefits.
Trump also proposes to eliminate or increase the $10,000 cap on the state and local tax (SALT) deduction.
Trump proposes to make permanent the expiring TCJA individual income tax cuts.
Miscellaneous
CURRENT LAW
Most university endowments are tax exempt, with a small number subject to a 1.4% NIIT imposed by the TCJA.
HARRIS'S STATED GOALS
In addition to increasing the small business startup deduction, Harris also proposes to make it easier for small businesses to file returns.
TRUMP'S STATED GOALS
Trump proposes to tax large, private university endowments.
Payroll Taxes
CURRENT LAW
The 12.4% payroll tax is divided evenly between employers and employees and applies to the first $168,600 of an individual’s income.
HARRIS' STATED GOALS
Although not a direct payroll tax policy, Harris proposes to exempt tip income.
TRUMP'S STATED GOALS
Although not a direct payroll tax policy, Trump proposes to exempt income from overtime pay and tips.
More details may be released as election day approaches, and we will update this content accordingly.
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